School Competition Saves: Consolidation Doesn’t (3rd of 4 parts)

by ANDREA NEALThe Indiana Commission on Local Government Reform missed the mark with its proposal to consolidate school districts with student populations below 2,000. There’s no research to suggest that consolidation would improve student achievement or raise test scores. And headaches associated with consolidation would exceed the modest cost savings.

If policymakers want to save money — and boost student performance — they should be thinking about competition, not consolidation. When public schools have to compete for students, productivity rises across the board.

Under the commission’s Dec. 11 recommendation, school districts would have to reorganize to "achieve a minimum population of 2,000.” That would affect 151 of Indiana's 293 school corporations. The commission based its recommendation on a false assumption: That consolidation could occur without the closing of schools and central office savings alone would be sufficient to justify the change. “Indiana has too many school districts and administrators, but Indiana does not have too many schools,” the report said. “We recommend retaining geographically dispersed schools to allow districts to maintain optimal class sizes and serve local populations and needs.”

The fact is: The bulk of savings that come with consolidation historically have been the result of school mergers and not reduced overhead in a district’s central office.

Faced with similar calls to consolidate in Arizona, the Goldwater Institute, a public policy research organization similar to our Indiana Policy Review Foundation, studied the potential benefits of consolidation and reached this conclusion: “Statewide school district consolidation is unlikely to produce the hoped-for fiscal savings.”

An audit of school spending in that state found that the largest chunk of administrative dollars, 52 percent, is spent at the school building level in the form of salaries and benefits for principals, clerical support and assistants. Business and central support services make up 33 percent of administrative costs, and the remainder is connected to the superintendent’s office.

“Because the majority of all administrative costs occurs at the individual school level, current consolidation proposals would address less than half of all administrative costs,” the Goldwater study said. More worrisome, “a growing body of research now suggests school district consolidation may have a negative impact on student achievement,” according to the Goldwater researchers.

In fairness to the Indiana Commission, the negative effects of consolidation are most prevalent in urban districts with tens of thousands of students, not those in the 4,000 to 5,000 range, which would be created by consolidations here.

On the latest ISTEP test, for instance, 57 percent of schools with 1,000 to 2,000 students exceeded the state average in language arts, compared to 61 percent of schools in the 2,000 to 5,000 category. The four systems with more than 20,000 pupils (Evansville, Fort Wayne, Indianapolis, South Bend) all fell below average.

But there’s no positive effect from consolidation either, which makes it a less-appealing policy option.

A July report by Indiana University researchers, commissioned by the Legislature, reached a similar conclusion to the Goldwater study. “Although consolidation has been shown to reduce costs in small school districts in the short run, these reductions are replaced in the long run by other expenditures, such as the hiring of more administrators and specialized staff. This negatively affects the tax base and fiscal capacity of the district.”

As for its impact on achievement, “studies indicate that there are no significant effects on school performance after consolidation,” said the Center for Evaluation and Education Policy, which suggested that school districts remain autonomous but work to pool resources and share services to reduce costs.

If lawmakers want to cut costs, they need to inject more market forces into the school system, as has happened elsewhere.

Arizona has an open enrollment program, which allows students to attend the public school district of their choosing under certain conditions. That option, along with the presence of almost 500 charter schools, has created something of a free market environment within the public school system.

Maximizing open enrollment in Arizona, the Goldwater study found, would increase school efficiency overall by 10 percent and decrease spending by 8 percent. Expanding charter schools, which are cheaper, would yield a per pupil savings over 90 times greater than that promised by consolidation, $1,573 per pupil compared to $17 per pupil.

Those are the kinds of ideas the Commission on Local Government Reform should be pursuing in Indiana. Consolidation is a 20th Century reform, and it hasn’t made education any better.

Andrea Neal is a teacher at St. Richard’s School in Indianapolis and adjunct scholar at the Indiana Policy Review Foundation. Contact her at aneal@inpolicy.org.

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